| September 3, 2014

Why is Qualifying for a Mortgage so Difficult?

One in four U.S. banks reduced lending standards but many Americans are still shut out.

Qualifying for approval on a new mortgage

The Federal Reserve announced those stats in early August but there’s a catch… Those lending standards are only being reduced for people with strong credit. So what about the millions of Americans with just decent credit or the first-time home buyer who’s never applied for a mortgage before?

Mel Watt the Director of the Federal Housing Finance Agency (FHFA) implied earlier in the year that he planned to make credit easier to obtain. But mortgage lenders in general have continued to impose strict standards. Federal Reserve Chairwoman Janet Yellen noted at a press conference in June, “it is difficult for any homeowner who doesn’t have pristine credit these days to get a mortgage.”

The problem with getting a mortgage

Some economists think there are a few reasons why so many don’t qualify for a mortgage. Problems with their credit brought on by the recession, limited incomes and too much debt are just a few of the reasons.

Gary Herman, president of Consolidated Credit believes there are solutions to these problems. “Many people wish to buy a home but they’re really not prepared,” notes Herman. “They must first get their financial situation in order. Rebuilding their credit, alleviating debt and exploring ways to increase their income are a few solutions. It’s also wise to seek housing counseling so they can learn more about the mortgage process.”

Mortgage lenders beware

There seems to be a disagreement between the Federal Housing Finance Agency (FHFA) and lenders in general. Several lawsuits over past underwriting errors have spooked the lenders. The lenders contend that the rules governing mortgages are not clear enough, thus the underwriting errors. Additional reasons include:

  • Heftier costs for processing defaulted mortgages
  • Confusion over “mortgage put-backs” – when insurers, such as the Federal government, make lenders take back loans with underwriting errors
  • New regulations which put the onus on the lender to verify a consumer’s ability to pay back a mortgage

“It seems that the bickering back and forth between lenders and the government is preventing many consumers from qualifying for a mortgage,” says Herman. “But both sides make good points, so now it’s up to the consumers to get themselves financially healthy. Otherwise buying a home will become a nightmare instead of the American dream.”

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

All Consolidated Credit counselors are certified personal financial counselors (CFC) We've helped 5 million people get out of debt! Call us today and see what we can do for you.

Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

The National Industry Standards for Homeownership Education and Counseling are a set of guidelines for quality homeownership and counseling services. Industry professionals who adopt these standards can be trusted to provide consistent, high quality advice.
Click here to learn more.

Consolidated Credit Consulting Services, Inc. has been verified as the owner or operator of the Web site located at www.consolidatedcredit.org. Official records confirm Consolidated Credit Consulting Services, Inc. as a valid business. Call us today and see what we can do for you.

Consolidated Credit is a Certified ISO 9001 company, as verified through Bureau Veritas Certification.

Time tested and customer trusted. Consolidated Credit Counseling Services has been a BBB Accredited Business since 1998 and has a current A+ rating. Call us today and see what we can do for you.

View the Consolidatedcredit.org review status

Time tested and customer trusted. Consolidated Credit Counseling Services has been a BBB Accredited Business since 1998 and has a current A+ rating. Call us today and see what we can do for you.

View the Consolidatedcredit.org review status

Consolidated Credit is proud to be an ANAB accredited member. Accreditation by a recognized and respected body such as ANAB ensures the impartiality and competence of our company. To see what we can do for you, give us a call.

U.S. Department of Housing and Urban Development - HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. Consolidated Credit is proud to be a member of HUD and also part of the Hope Now Alliance.

You can save!

With this amount of debt, you'd pay around $xx.xx on a DMP.

FREE Debt Consultation